With snow on the ground and a head-cold looming, my thoughts have drifted to HSA accounts. Why not?
One of the last questions I get in a tax appointment seems to be “Is there anything else I can do to lower my taxes?” I pose the question back, “Do you have an HSA account?” Whether the answer is yes or no a very beneficial conversation ensues.
Most of my clients seem to think that they don’t incur enough medical expenses to benefit from a deduction. If they itemize their deductions, most of the time they are right. Now that the threshold for deducting medical expenses is 10% of AGI and now that most of my clients seem to own health insurance plans that have high deductibles, the value of an HSA account is evident.
If you want a current year contribution that is made by April 15th be deductible on the prior year tax return, the HSA account has to be set up before the end of the prior year. However, having the conversation early on in the year allows the taxpayer to get an account opened and in to the habit of contributing to it for their next tax return.
You can still make a contribution that is deductible on your 2015 tax return if you make it before you file return or by April 15th, whichever comes first. If you have a self-only coverage high-deductible health plan you can contribute and deduct up to $3,350. If you have a family coverage high-deductible health plan you can contribute and deduct up to $6,650.
If you don’t already have an account set up here are some things you need to know:
For a listing of what expenses can be paid out of an HSA plan go to page 8 of the IRS Publication 969.
If I can answer additional questions please contact me here.